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What Gen X Doesn't Know About Social Security

Members of Generation X, those born between 1965 and 1976, are planning to collect Social Security at an average age of 65, according to a recent survey. But that could be a mistake. Gen Xers won't qualify for the full Social Security payments they have earned until age 67. Those who sign up for Social Security at age 65 will get permanently lower payments for the rest of their lives.

The Social Security full retirement age at which you can claim the entire benefit you have earned is 67 for everyone born in 1960 or later. Gen Xers who sign up for Social Security at age 65, as 29 percent plan to do, will see their monthly payments reduced by about 13.3 percent.

A GfK Custom Research North America survey of 1,000 adults ages 36 to 47 commissioned by the MetLife Mature Market Institute found that 18 percent of Gen Xers plan to claim Social Security benefits as soon as they are eligible at age 62. But workers who sign up at this age will see their payments reduced by 30 percent. For example, a worker who would be eligible for $1,000 per month upon retirement at age 67 would get just $700 per month is he signs up for Social Security at age 62. Another 16 percent of people in their late 30s and early 40s simply don't know when they will start receiving Social Security benefits.

Some Generation Xers plan to delay claiming Social Security beyond their full retirement age in order to get a bigger benefit later on in retirement. Nearly a quarter (24 percent) of Gen Xers are aiming to collect Social Security at age 68 or older, which will result in bigger monthly checks. Social Security payments will be increased by 8 percent for each year workers delay claiming Social Security up until age 70. After age 70 there is no additional benefit to delaying Social Security benefits.

To their credit, when Gen Xers in the survey were given information about the ages at which they will be eligible to collect full or partial Social Security benefits, they increased the average age they will sign up for Social Security to 66. But Gen Xers who sign up for Social Security at age 66 will still see their payments reduced by 6.7 percent because their full retirement age is 67. "It seems Generation X may not fully understand Social Security," according to the MetLife report. "Many respondents were apparently unaware of the ages at which they will be eligible for full or partial Social Security benefits."

The survey respondents were asked: "For those born in 1960 or later, the age at which you can collect full Social Security retirement benefits is age 67. The earliest you can start receiving benefits is as early as age 62, but at a reduced amount. Does this information change when you plan on taking your Social Security retirement benefits?" Approximately a third of the survey participants changed their response, boosting the proportion of people who plan to sign up for Social Security at age 67 from 10 percent before this information was provided to 29 percent after. "Nevertheless, most did not change their response, and this new average age was still a year younger than they could possibly become eligible for full benefits," according to the report. "These results indicate Gen Xers may widely start out by collecting partial Social Security benefits."